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Korean labor accepts layoffs:
Korean labor unions agree to accept layoffs
7.40 a.m. ET (1236 GMT) February 6, 1998
By Reid G. Miller,ÿAssociated Press
SEOUL, South Korea (AP) - Militant labor unions bowed to international and domestic pressure today and grudgingly conceded to the need for layoffs by South Korean businesses, a key element in a government package of economic reforms.
The agreement by the unions was deemed vital by President-elect Kim Dae-jung, the International Monetary Fund and most Western governments to restoring foreign investor confidence in the Asian nation's crumbling economy.
The "grand compromise,'' as it is being called by both unions and employers, ended three weeks of tough negotiations by representatives of labor, business and government. It will now be incorporated into a bill expected to be approved almost immediately by Parliament.
"It has been proven again that this nation has hope for the future,'' the president-elect said. "By this, we have secured a new stepping stone for a leap forward.''
Accepting layoffs was a major concession by South Korean workers accustomed to lifetime employment. In return, they will be given greater labor freedom, the right of unions to engage in politics and a strengthened safety net of unemployment benefits.
Other reforms, not covered by the agreement but promised by the government, include a restructuring of the country's bloated, debt-ridden conglomerates - mostly family-run enterprises known as "chaebol'' that make everything from microchips to cars and ships.
A reorganization of the conglomerates was also demanded by the IMF when it granted South Korea a record $57 billion bailout two months ago. The government maintains that a new consolidated accounting system will inevitably lead to the dissolution of chaebol by eliminating the practice of hidden cross-funding by their many subsidiaries.
The president-elect underscored his determination to change the way the chaebol do business in a luncheon meeting today with heads of the country's 30 leading conglomerates.
Kim told the industrialists they must restructure their businesses "at whatever cost. The government will never leave it half done.
"Without (the conglomerates') reforms, there is no future for the country and for the businesses,'' he said.
At the same time, the president-elect has insisted that the chaebol must have the freedom to trim their work forces and become more competitive. He called it a key to wooing back foreign investors who fled the country last year, aggravating a financial crisis.
"This agreement is not a simple statement. It's a grand national compromise for coexistence, not one-sided control,'' said Han Kwang-ok, an adviser to the president-elect.
News of the pact sent closing stock prices up 2.3 percent on the Seoul exchange.
Two rival national labor umbrella groups endorsed the agreement as an "inevitable'' compromise.
Park In-sang, head of the larger Federation of Korean Trade Unions said: "It's painful to accept layoffs, but what we have agreed on is the second-best choice.''
In the past month, international investors, IMF officials, the United States and other governments have paraded through Seoul, all urging the unions to relax their opposition to layoffs. Now, layoffs are virtually impossible without the approval of labor unions or a court.
Representatives from the unions, management and the government began last month to discuss ways to share the pain of rebuilding South Korea's economy.
But the negotiations quickly stalemated over how unions would be compensated for accepting layoffs that are expected to drive up to 1 million workers out of their jobs by the end of this year.
The unions had been threatening nationwide strikes if a bill went to Parliament without their consent. |
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